In this guide
What is an EBITDA multiple? Multiples by company size Sector-by-sector multiple data 2025–26 What moves your multiple up or down? How to achieve a premium multiple How buyer type affects the multipleWhat is an EBITDA multiple?
An EBITDA multiple is the ratio between the enterprise value of a business (the total price paid, before balance sheet adjustments) and its normalised EBITDA. If a business generates £1 million of normalised EBITDA and sells for £5 million, the EBITDA multiple is 5x.
The multiple is not a fixed number. It reflects a buyer’s collective judgement about the risk and quality of the earnings being acquired. A higher multiple means the buyer is prepared to pay more for each pound of earnings — because those earnings are more predictable, more likely to grow, or more strategically valuable in their hands.
Understanding the multiple in your sector is the first step in understanding what your business is worth. But the sector average is only the starting point — where you sit within that range depends on the specific characteristics of your business.
Enterprise value versus equity value
The EBITDA multiple produces an enterprise value. To arrive at the equity value — the cash you actually receive — you deduct net debt (borrowings minus cash) and make adjustments for working capital relative to a normalised level. A business with £5m enterprise value but £1m of net debt delivers £4m of equity proceeds. This distinction matters considerably when comparing headline deal values.
Multiples by company size: the premium for scale
The single most consistent pattern in UK SME deal data is the expansion of multiples with scale. Larger businesses command higher multiples for reasons that are structural rather than arbitrary.
Small businesses are more owner-dependent, have thinner management layers, are less resilient to customer loss, and represent a less liquid investment. All of these factors increase the risk the buyer is taking on — and higher risk demands a lower price relative to earnings. As a business grows, it typically develops the infrastructure that reduces these risks: a management team that runs operations, a diversified customer base, formal systems and processes, and a track record of earnings resilience through different market conditions.
| Normalised EBITDA | Multiple Range | Median | Primary Buyer |
|---|---|---|---|
| Under £300k | 1.5x – 3x | 2.5x | Owner-managers, lifestyle buyers |
| £300k – £750k | 2.5x – 4.5x | 3.5x | Trade buyers, search funds |
| £750k – £1.5m | 3.5x – 6x | 4.5x | Trade, regional PE, MBO |
| £1.5m – £3m | 5x – 8x | 6x | Mid-market PE, strategic trade buyers |
| £3m – £7m | 6x – 10x | 8x | Institutional PE, international strategics |
| Above £7m | 8x – 14x+ | 10x | Large PE, listed acquirers |
UK market data 2025–26. Ranges are indicative and vary by sector, growth profile, and buyer competition. Not suitable for use as a formal valuation.
Sector-by-sector EBITDA multiples 2025–26
The sector a business operates in has a direct effect on the multiple range available. Sectors with high recurring revenue, strong growth tailwinds, or consolidation activity typically attract higher multiples than those in mature or cyclical markets. The data below reflects observed UK SME deal activity and professional benchmarks for 2025–26.
Recurring monthly or annual subscription revenue commands the highest multiples in the SME market. Revenue multiples (often 3x–8x ARR) are also applied alongside EBITDA. Buyers are paying for the predictability and compounding of the subscription model. Net revenue retention and churn rates are scrutinised heavily.
Dental, care homes, domiciliary care, and specialist healthcare services attract strong consolidator interest. Regulatory compliance status is a primary due diligence focus. CQC or GDC registration and rating directly affects price. NHS contract or local authority contract revenue adds significant recurring value.
Highly active acquisition market driven by PE-backed consolidators. Recurring monthly contract revenue is the key value driver. Gross margin on recurring revenue (typically 60–70%+), customer retention rates, and average contract value are analysed in depth. Businesses with mature RMM and PSA tooling are easier to integrate.
Regulatory advisory, compliance consulting, and specialist professional services with high repeat client retention attract premium interest. Key risk is owner dependency — if the founder holds all key client relationships, buyers will apply a discount or structure earnout provisions. A strong second-tier management team materially changes the conversation.
Facilities management, payroll, HR services, and similar outsourcing businesses. Contract length and renewal rates are central to valuation. Multi-year contracts with blue-chip clients underpin the top of the range. Businesses with high labour intensity and low margin are at the bottom.
Testing, inspection, calibration, and specialist engineering services. Businesses with PPM or service contract revenue trade at a significant premium to those dependent on reactive or project-based work. Defence and aerospace supply chain businesses attract particular consolidator interest.
Strong brand equity, direct-to-consumer distribution, and listed retail presence drive the upper end of the range. Private label or commodity food businesses without brand differentiation trade at the lower end. Brand strength, retailer relationships, and DTC revenue quality are key levers.
Temporary and contract staffing businesses are typically valued on gross profit (GP) rather than EBITDA, with a GP multiple of 0.5x–1.5x common. Permanent placement businesses with retained search elements attract higher earnings multiples. Labour legislation risk and the cost of compliance are increasingly factored into buyer analysis.
General manufacturing is a wide sector with a wide range. Businesses with proprietary product, protected IP, or strong export credentials achieve the upper end. High capital intensity, commodity input exposure, or reliance on a single customer or sector compress multiples. Capital expenditure requirements are deducted from the value equation.
General contracting businesses typically attract lower multiples due to project-based revenue, thin margins, and contract completion risk. Businesses with specialist capability (M&E, civils, fit-out), framework agreements, or significant facilities management service revenue trade towards the top of the range. Working capital management and retentions are closely scrutinised.
Asset-heavy transport businesses (owned fleet) attract lower multiples due to capital intensity and vehicle depreciation. Asset-light freight brokerage and 3PL businesses with contracted volumes achieve higher earnings-based multiples. Customer concentration risk — particularly single-retailer dependence — is a primary buyer concern.
Data reflects indicative UK SME market ranges based on professional deal experience and available transaction benchmarks, 2025–26. Actual multiples depend on company-specific factors, deal structure, and buyer competition. This page is updated annually.
What moves your multiple up or down?
Within any sector range, there is a wide spread of achievable multiples. The difference between the floor and the ceiling in most sectors is two to four times — and on a £1.5 million EBITDA business, that gap can represent £3 million to £6 million of value. The factors below are what determine where you sit.
- + High recurring or contracted revenue
- + Diversified customer base (no single customer above 15%)
- + Strong second-tier management team
- + Three or more years of consistent earnings growth
- + Proprietary technology, IP, or protected market position
- + Multiple credible bidders in any sale process
- − Single customer above 25% of revenue
- − Business unable to operate without the founder
- − Declining or inconsistent earnings history
- − Project-based or one-off revenue with no recurrence
- − Unresolved legal, regulatory, or environmental issues
- − Poorly maintained financial records
How buyer type affects the multiple
The multiple a buyer offers reflects their cost of capital, their strategy, and the value the business represents specifically in their hands. Different buyer types have systematically different approaches to pricing.
Trade buyers (strategic acquirers)
Trade buyers are operating businesses acquiring a competitor, a customer, or a supplier. Because they can typically realise synergies — cost savings, revenue overlap, geographic expansion, or capability acquisition — the business is worth more in their hands than it would be standalone. Strategic buyers will sometimes pay above-market multiples if the acquisition closes a strategic gap or eliminates a threat. They are, however, slower and more relationship-driven in their decision-making.
Private equity
Financial buyers — PE funds and their backed platforms — buy on the basis of the standalone earnings, management team quality, and the platform’s growth potential. They typically apply a more disciplined multiple framework than trade buyers, but bring speed, process certainty, and the ability to close acquisitions that require management rollover. PE-backed acquisitions are particularly active in sectors undergoing consolidation, where a bolt-on business with a lower standalone multiple can be acquired and immediately revalued at the platform’s higher multiple — a phenomenon known as multiple arbitrage.
Management buyout teams
In an MBO, the existing management team acquires the business from the founder, typically supported by a combination of bank debt and PE or debt fund capital. MBO pricing is shaped by the debt capacity of the business (what the lenders will support) and the return expectations of the equity co-investor. MBO multiples are typically at or slightly below trade buyer multiples — the buyer is the incumbent management team, not an external party willing to pay a strategic premium.